Hong Kong’s Cathay Pacific Airways to pay HK$4.93 billion to buy budget carrier HK Express
- Deal will make company the city’s dominant airline group, in control of three of Hong Kong’s four carriers
- But Cathay faces challenge from HK Express chairman Zhong Guosong, who has resisted selling the stake he controls
A HK$4.93 billion (US$628 million) mega deal announced by Cathay Pacific Airways on Wednesday to acquire low-cost carrier HK Express faces shareholder opposition, with the majority owner signalling he will launch legal action.
Hong Kong’s biggest airline has indicated it faces a challenge from a single player, understood to be HK Express chairman Zhong Guosong, who is resisting selling the stake he controls.
The city’s flagship carrier – which includes its namesake long-haul airline and regional firm Cathay Dragon – will put up HK$2.25 billion in cash and has pledged to repay HK$2.68 billion of debt held by HK Express in the form of promissory notes. The deal will underscore its position as Hong Kong’s dominant airline group.
It has promised not to change HK Express’ low-cost business model, which pulled in 4.1 million passengers last year, and said the budget carrier would continue to operate as a stand-alone airline.
The sale will mean about half of airline seats for sale at Hong Kong International Airport will be offered by Cathay and its enlarged portfolio of carriers, which together will control 45 per cent of the runway slots in the city, according to the CAPA Centre for Aviation.
